Alibaba Group Holdings, China’s largest eCommerce company, is being put on notice in terms of its dominant position from a stock perspective, with Samsung Electronics catching up.
On Thursday (Aug. 18), Samsung Electronics’ stock reached an all-time high, enjoying a 30 percent rally so far this year, as the electronics maker benefits from its line of Galaxy 7 smartphones. As of the close of trading on Thursday, The Wall Street Journal reported Samsung shares were at $1,480. It is now close to surpassing Alibaba from a market capitalization perspective and is also ahead of Intel, Coca-Cola and Visa in terms of market cap in the U.S. Its main rival, Apple, is still a lot bigger, with a commanding market capitalization of $562 billion.
The surge in shares of Samsung Electronics comes after the South Korean company was able to post its most profitable quarter in two years in July. Operating profit in its mobile business increased 57 percent in the April–June period compared to a year earlier. The strong showing on the part of Samsung Electronics is being driven by the mobile division, as demand for its Galaxy line of phones continued unabated. There are some concerns that the company will have a tough time keeping up the momentum after Apple’s new iPhone model is released in September. Reports point to Sept. 7 as the release date for the iPhone 7.
Samsung also faces increased competition from Chinese handset makers. While Samsung’s mobile division is doing well, its market share declined last year with the launch of the iPhone 6 by Apple. It also faced more competition from handset makers focused on the lower segment of the market. The Galaxy 7 has turned things around in 2016. The camera in the Galaxy 7 and the battery life are better than previous models, and the phone can withstand water. It also was priced lower.
